As part of the announcement, Grail is also spinning out of its parent company, San Diego's Illumina, the $2.4 billion (sales) firm that makes most of the DNA sequencing machines that scientists and doctors use to study human biology, diagnose rare genetic diseases and pick treatments for cancer patients. Illumina is keeping a 20% stake in Grail.

“We founded Grail a year ago to enable early cancer detection via a blood-based screening test powered byIlluminasequencing technology,” said Jay Flatley, Executive Chairman of Illumina and current Chairman of Grail. “This raise, when completed, will provide Grail the resources to develop its first products and embark on the large-scale trials required to demonstrate the stringent performance requirements of a cancer screening test.”

The spinout is likely to be popular with many of Illumina’s investors. Grail executives have discussed conducting clinical trials involving hundreds of thousands of patients. These would be expensive, and could be a drag on Illumina's profitablity. Illumina shares fell 23% last year.

In a press release, Grail said it has received "indications of interest" from investors who would commit $1 billion. That means the money has not been received, and that the size of the funding round could grow. Grail said in an interview that the announcement was made now so Illumina could give clearer guidance to its investors, and because there may be others interested in investing.

The $1 billion round represents a victory--and a gamble -- for ARCH venture capitalist Robert Nelsen, who has been pushing venture investments in biotechnology into the nosebleed realms favored by the Silicon Valley set. Traditionally, biotech companies have limited capital, raising first tens then hundreds of millions as drugs progress. Nelsen has recently engineered much bigger deals with Juno Therapeutics (cancer, $120 million raised in its first round in 2013) and Denali Therapeutics (Alzheimer's and Parkinson's, $217 million raised in a round in 2015). Those deals, however, would be dwarfed by this one.

Grail was created as a unit of Illumina in late 2015, based on internal research at Illumina that showed sequencing DNA in the bloodstream again and again made it possible to pick up floating bits of DNA from cancer cells much more accurately than scientists previously believed. This data has not been published. At the time, investors including ARCH Venture Partners, Jeff Bezos and Bill Gates invested $100 million in the company.

As chief executive, Illumina hired Jeff Huber, a former Google executive. He says he was inspired to take the job in part by the death of his wife Laura, a healthy 46-year-old, from colorectal cancer. "It’s very mission-driven for me," he said in an interview this afternoon.

Huber says the company had made progress toward its audacious goal: "A test that will detect all of the major cancer types." That will require what he calls "ultra-intense genome sequencing and two or three orders of magnitude deeper than anyone else is doing."

"Cancer is not one thing," says Huber. "It is really driven by mutations. Every case of cancer is unique. It is a snowflake. Being able to [find it] with medical and statistical rigor drives clinical studies of unprecedented scale." Already Grail has announced that it has started a 10,000-patient clinical trial, but Huber says studies involving hundreds of thousands of patients will be required, as will machine-learning technologies that the company is in the midst of building up.

The history of creating diagnostic tests in cancer is long and bitter and pockmarked with failure. For existing tests, like PSA for prostate cancer or mammography for breast cancer, debates rage about whether or not the tests harm more patients with additional surgeries and test procedures than they help. For many doctors, Grail's vision conjures up a whole population of people who are warned they have cancer before there is anything they can do. That's something that the company will have to grapple with even as it also wrestles with a disease that has afflicted people for the entirety of human history.

In fact, looked at another way, $1 billion isn't that much. Companies including Pfizer and Johnson & Johnson have spent that on individual experimental medicines--investments that sometimes ended up producing mainly financial losses. Huber says that Grail is going to be "prudent" with the money it is about to raise. "It is capital intensive path," he says.